How companies get added to (and removed from) the S&P 500

Many people assume the S&P 500 is the 500 largest U.S. companies by market cap, full stop. It isn't. It's a curated indexselected by a committee inside S&P Dow Jones Indices. The committee applies a published set of rules, but also exercises judgment.

The result: the index changes several times a year, and not every $50 billion company gets in.

The eligibility rules

To be considered for inclusion, a company must meet criteria covering size, liquidity, and structure. The headline requirements are:

• U.S. domicile. The company must be a U.S. corporation, judged by factors like SEC filings, headquarters, incorporation, and where revenue is sourced.
• Market capitalization.A minimum threshold that S&P updates periodically. It's currently set in the range of $20 billion (effective 2025), and is intentionally kept close to the lower bound of existing index members.
• Public float. At least 50% of shares must be available for public trading.
• Profitability. The company must have positive earnings in the most recent quarter and a positive sum of earnings over the trailing four quarters.
• Liquidity.Adequate share trading volume relative to the company's float-adjusted market cap.
• Listing. The stock must trade on a major U.S. exchange (NYSE, Nasdaq, or Cboe).
• Share class. Multi-class share structures are no longer eligible for new additions, though several existing members are grandfathered in (Alphabet, Meta, Berkshire Hathaway).

Meeting the rules doesn't guarantee admission

Eligibility makes a company a candidate. The selection committee decides who actually joins, and not every eligible candidate gets in. The committee aims for the index to be representative of the U.S. large-cap equity universe — including sector balance, not just size. If a sector is already well-represented, a new addition there is less likely; an under-represented sector might get priority.

Tesla is a famous example: it met the formal criteria for years before finally being added in December 2020.

When changes happen

The S&P committee meets quarterly to do scheduled rebalances — typically in March, June, September, and December. But changes can happen any time a vacancy opens up. Causes of unscheduled changes include:

• Mergers and acquisitions. When a constituent is acquired and ceases to trade, its slot opens up immediately.
• Bankruptcies and going-private deals.Same idea — the company is no longer eligible, so it's replaced.
• Spin-offs. A parent company spinning off a unit may create a new eligible entity (which may or may not get into the index).
• Loss of eligibility. Falling materially below the market-cap threshold or other criteria.

S&P publishes scheduled changes about a week in advance. Stocks getting added often see a price pop on the announcement, because index funds need to buy them ahead of the effective date — a phenomenon known as the index effect.

The full history of changes

We maintain a complete log of every S&P 500 addition and removal on our S&P 500 changes page, including dates and reasons. It's a useful way to see how sector composition has evolved over the decades.

What gets removed?

Removals usually come from three categories: companies acquired or taken private, companies that fall well below eligibility thresholds, and underperformers that S&P wants to swap out for stronger candidates. The committee tries to avoid churn — it would rather leave a borderline company in than juggle constant replacements.

The takeaway

The S&P 500 is curated, not mechanical. Eligibility is necessary but not sufficient, and the committee's judgment about sector balance and index representativeness matters. That curation is part of why the index has held up as a benchmark for so long — and why every reshuffle is worth paying attention to.